WA lashes Gillard’s CSG deal

Prime Minister Julia Gillard acknowledged coal seam gas and mining projects with approvals pending could face delays as a result of the government’s deal to secure cross-bench support for its mining tax.

The government was yesterday seeking to push the tax through the House of Representatives but first needed to convince the Greens, who had threatened to withdraw their support after some small miners were carved out.

There was also a widening backlash from state governments, as West Australian Premier Colin Barnett said the state would not sign up to a national push to regulate the coal seam gas industry as it would add another layer of red tape for miners, potentially in other sectors such as iron ore.

Ms Gillard said she had asked Environment Minister Tony Burke to set up an interim scientific committee to provide advice on projects until a permanent committee was established after consultation with state governments.

“It is not expected that this will unduly delay projects. However, some approval processes will need to be extended to allow time for the independent expert scientific committee to prepare its advice," she told parliament.

She said approved projects would continue, subject to existing conditions on their approvals.

The federal government will urge states to heed advice from the interim committee but cannot prevent them from issuing new licences.

Mr Barnett said WA would not sign an agreement that could impose a new level of regulation over all extractive industries.

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“The federal government is expecting us to sign up to a new level of regulation over any extractive industry where it relates to water," he said. “Well, dig a mine in the Pilbara and you hit the water table.

“So we are going to have a new level of federal regulation of all extractive industries.

“Well, my answer to that is the commonwealth Government can do what it wants and if NSW and Victoria and Queensland agree, so be it, but Western Australia will not sign any such agreement."

Victoria on Monday said it would also oppose the changes. “The Coalition government will not be compromising its approvals processes to suit the dysfunctional Gillard government," Victorian Minister for Energy and Resources
Michael O’Brien
said.

M
s Gillard
won the support of key independents for Labor’s minerals resource rent tax on Monday after agreeing to tougher regulations on coalmining and coal seam gas, as well as making concessions on the tax for small miners.

Under a deal with
Tony Windsor
and
Rob Oakeshott
, the states will have to take advice on the impact of exploration and mining on underground water from a new independent expert scientific committee, costing $150 million, before they approve coal seam gas exploration licences.

Labor has set aside $50 million in incentive payments to persuade premiers to agree to the changes. But if they don’t, the government will legislate to create a trigger for the ­commonwealth to assess the impact of exploration or mining on water resources.

The transitional arrangements and whether the new regulation would apply to projects awaiting approval was the focus of the government’s negotiations with Mr Windsor last week. There are mining approvals pending in his electorate.

Ms Gillard was yesterday forced to reopen talks with the Greens on the mining tax, after leader Bob Brown demanded the government make up the shortfall of $20 million a year in revenue from the minerals resource rent tax following from its deal with independent MPs.

This resulted from the government agreeing to Tasmanian independent Andrew Wilkie’s demands that coal and iron ore mining companies earning profits after allowances of under $75 million a year be exempt from the tax, up from $50 million. Just 20 to 30 miners will pay the tax after the changes.

Ms Gillard is due to meet on Tuesday with Greens leader Bob Brown to try to secure his support.

Senator Brown said on Tuesday the party’s support should not be taken for granted.

“We are going to take a stand on this," he said.

The Greens say the $20 million should be found by cutting concessions to the mining sector and are not prepared to have it funded from cuts to health, education or public transport.

Finance Minister Penny Wong said the government would find the $20 million in savings.

Mr Barnett also lashed the federal government for threatening the state on royalties, saying the mining tax and associated GST review were an attack on the state that would weaken the federation.

“It is a grab for the wealth of Western Australia," he told reporters outside state Parliament on Tuesday.

“Sixty five percent of the [mining tax revenue] revenue will come out of this state – so basically it’s a tax on WA at a time when we get an unfair deal out of [Treasurer] Wayne Swan and the federal government over the GST."

He said the Prime Minister’s promise to Mr Oakshott to have the Greiner review consider how to penalise states GST for raising royalties was “abhorrent", given the Grants Commission process did not take into account poker machine revenue, of which WA raised little.

“One of the jobs of the Prime Minister is to defend the constitution and maintain cohesion with the Australian [federation]," Mr Barnett said.

“Prime Minister Julia Gillard is not doing that. She threatens the very fabric of co-operation within our federation."

He said he was not calling for the state to secede, but that the federal government’s actions would impact on federal-state co-operation.

“This is not a secessionist argument, but the federation could be weakened if the Commonwealth government continues down this path," he said.

“Weakened to the extent that WA will simply become closer to Asian economies, we will become more enmeshed in their economic future as they will in ours, and we will have less to do with Canberra. You will get more independent state governments.

“The GST review was to look at the unfair distribution and to look at the system of the Grants Commission which I think anyone in Australia would have to concede it is so out of date, so dysfunctional, that is serves very little purpose.

“WA has said their should be a floor, some of the other states have said we should allocate on a simple per capita basis. We could accept that as well because at least it would give us some certainty. But that is what that committee is meant to be looking at, not penalising states for charging for their mineral assets, it is absurd."